Pimco raising $1 billion for distressed loans: report

NEW YORK (Reuters) - Pacific Investment Management Co. is raising some $1 billion for a fund to buy distressed home loans and commercial mortgages from banks, Bloomberg News reported on Friday.

The money manager, known for its Pimco Total Return Fund, is raising capital for its Bank Recapitalization and Value Opportunities, or Bravo, fund, Bloomberg said.

It will renegotiate terms of the loans via a third party servicer, Bloomberg said.

A Pimco spokesman declined to comment.

Money managers for at least two years have been using capital to purchase troubled loans at a steep discount to face, and using that cushion to ease terms of loans for borrowers. By gaining control of the loans, the managers also have greater flexibility in finding solutions that benefit the borrower and enhance the value of the asset.

Banks are expected to sell loans after the Basel Committee on Banking Supervision in September raised the level of capital that must be retained against assets on balance sheets, Bloomberg said.

(Reporting by Al Yoon, Editing by Chizu Nomiyama)